Can trade repair frayed Turkey-EU-US ties?

MEHMET ÖĞÜTÇÜ – SANFORD HENRY*

Turkey’s fractious relationship with the European Union may well deteriorate further after the April 16 referendum. Turkish voters are being asked to approve a slew of constitutional amendments, the most important of which will entrench Recep Tayyip Erdoğan’s dominance as a powerful executive president.

The referendum takes place amid what appears to be a permanent schism between the EU and Turkey. Delays and obfuscations over Turkey’s membership in the EU have persuaded Ankara to seek geopolitical solace elsewhere and reconsider the accession process, including through a referendum on whether to continue or abandon it. Europe’s incoherent and ham-fisted attempts to anchor Ankara in the West, ignoring key Turkish concerns and strategic priorities, have in fact encouraged Erdoğan’s ambitions to act as the leader of a wider neighborhood around Turkey.

Indeed, in the face of the changing dynamics in the region, the United States may now be courting Turkey once again as a key ally on the fringes of the cauldron that the Middle East has become.

Trump and Erdoğan are arguably similar personalities, both with visions for serious change in their own countries. Rex Tillerson’s recent visit to Turkey underlined the importance Washington attaches to its NATO ally, as well as serious divergence of interests in Syria and Iraq. The referendum, whatever the result, is unlikely to change the existing political balance in Turkey as Erdoğan has a mandate until 2019.

America’s interest in stronger ties with Turkey, initially focused on security, could also be expanded to trade – something Turkey has always wanted from Washington. Trump’s preference for bilateral trade deals over complex, multinational agreements such as the Trans-Pacific Partnership, which he consigned to the dustbin within a day of taking office, could work in this regard. Trump’s view was recently echoed by his secretary of commerce, Wilbur Ross, who called for a “comprehensive analysis of the economic realities” of today’s global commercial environment.

Focusing on trade makes sense for both countries. Turkey, with a share of global trade at around 1 percent in 2016, offers the U.S. an enormous market, as well as a political springboard for further deals with countries in the Middle East, Gulf and Eurasia where Turkey is considered a privileged partner. The Turkish-U.S. trade volume currently stands at $17 billion, well below the potential of the two countries. It is way behind the EU-Turkish trade in 2016 of 145 billion euros (67 billion of which are Turkish exports and 78 billion of which are imports). Turkey’s main export markets are the EU (44.5 percent), Iraq, the U.S., Switzerland, the United Arab Emirates and Iran. This cannot change from one day to another and requires sustained efforts to boost trade flows.

Erdoğan will likely encourage talk of a U.S.-Turkish trade agreement regardless of the referendum’s outcome, because it will signal to the “no” camp that Turkey will remain an outward-looking nation bound by a partnership to the world’s superpower, alongside its modernized customs union with the EU and other regional arrangements with Russia and China.

Furthermore, a U.S.-Turkish trade agreement, if realized, would be another blow to the EU, which is reeling from the United Kingdom’s decision to leave. Such a deal could show the EU and the U.K. the way forward for more flexible trading relationships.

It is somewhat ironic that America, which under Donald Trump is supposed to be more isolationist and protectionist, could eventually become the bridge that helps to repair EU-Turkey ties through a renewed emphasis on commerce. Moreover, a trade accord which will not be easy to negotiate could help address the crisis of confidence resulting from Washington’s support for the Syrian Kurdish Democratic Union Party (PYD), which Ankara insists is an extension of the outlawed Kurdistan Workers’ Party (PKK).

Until just a few weeks ago, Turkey, Russia and Iran were engaged in trying to maintain a cease-fire in Syria. Now, Turkey is facing a strategic decision about who best could support its regional leadership ambitions or jeopardize its interim alliance with Russia’s Vladimir Putin and Iran’s Hassan Rouhani over Syria. Will Turkey edge closer to the U.S. or continue its marriage of convenience with Russia and Iran and repair ties with the EU?

Increasingly isolated, Erdoğan appears to see Trump as a suitable partner in this respect at the expense of better ties with its regional partners if a common strategy over Iraq and PYD can be hammered out. A scheduled Trump-Erdoğan summit in May in Washington DC could be the occasion to sign off a broader partnership embracing security, trade, energy and investment, which might place the trans-Atlantic partnership in the right context which will serve mutual interests and regional security.

As a regional power to be reckoned with and trusted by all parties, Turkey needs a well-calibrated, confidence-inspiring and multi-vectoral policy, rather than going off track and changing directions and allies in the face of every crisis episode it faces.

*Mehmet Öğütçü is the chairman and Sanford Henry is a partner at Global Resources Partnership, UK.